Partly Cloudy

Partly Cloudy

max temp: 15°C

min temp: 10°C

ESTD 1874 Search

UK: British Gas profits plunge 26% as owner Centrica comes under renewed pressure over bills

08:31 31 July 2014

Centrica Head office in Windsor, Berks

Centrica Head office in Windsor, Berks

PA Wire

British Gas profits fell by a quarter in the first half of the year, owner Centrica reported today as it came under renewed pressure over household bills.

shares

The group said operating profit for the period was 26% lower than last year at £265 million at its UK residential energy supply arm as earnings were dented by the mild weather.

It said profit margins from the business would be lower for the year, despite new figures from regulator Ofgem suggesting that suppliers were making an increasing amount of money from the typical household, up to £106 for the coming year.

Adjusted operating profit for the wider Centrica group was also hit in the first half, falling 35% to £1.03 billion.

Chief executive Sam Laidlaw said: “With challenging trading conditions on both sides of the Atlantic in the first half, earnings will be lower in 2014 than in 2013. However, the group is well positioned to return to growth in 2015.”

British Gas customers are paying higher tariffs this year after they were hiked 9.2% last autumn, though the rise was scaled back following the Government’s shake-up of so-called green levies on bills.

But Centrica said the average bill was expected to be £90, or 7%, lower this year reflecting warmer weather and energy efficiency measures.

The company reiterated that tariffs were not expected to change during 2014 “recognising competitive conditions in the UK energy supply market”.

It has come under pressure to cut bills after Ofgem pointed to falling wholesale gas and electricity prices - while it is also facing a full-scale competition probe which could see it vulnerable to a break-up.

However latest figures from the regulator suggesting rising pre-tax profit margins from household supply are disputed by industry body Energy UK.

Centrica defended its stance by pointing to the way it buys much of its energy in advance and that the benefit of lower wholesale prices for next year is offset by higher costs elsewhere.

It appeared to rebut Ofgem’s claims about profits by saying post-tax margins for this year were expected to be about 4%, lower than last year and below the 4.5%-5% band it says it needs to support investment in the business.

Meanwhile, the company said British Gas customer account numbers had stabilised over the second quarter, after a 1% decline in the first quarter. They numbered 15.1 million at the end of June.

The supplier also launched a smart meter-based “free Saturday or Sundays” energy tariff trial that has previously been trialled.

In the US, Centrica’s business saw earnings held back as it faced additional power market charges during harsh weather at the start of the year.

Chairman Rick Haythornthwaite said: “The first half of the year has seen challenging market conditions across the group, both as a result of the weather and reflecting the wider political environment.”

He paid tribute to the “exceptional leadership” of Mr Laidlaw, who is to retire at the end of this year. It was announced earlier this week that he will be replaced by BP executive Iain Conn.

shares

0 comments

Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files
Comments

Please log in to leave a comment and share your views with other East Anglian Daily Times visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by East Anglian Daily Times staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique East Anglian Daily Times account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

Sizewell A and B

Staff at the redundant Sizewell A nuclear power station will have to wait to find out if their jobs are safe from planned redundancies.

The opening of Precision Marketing's new headquarters in Bury St Edmunds.

An expanding marketing services firm celebrated the official opening of its new head office in Bury St Edmunds yesterday.

Arlingtons new art exhibition, Liz and Ken Ambler at the launch

Music, art, wine and a great deal more

Steven and Debbie Morgan pictured when they took over The Royal Oak earlier this year

Firefighters were called to a pub last night following a water leak which caused flooding.

Abby Curtis who is opening Pump and Grind coffee shop in Great Colman Street with Tom Kerridge

The business team behind a new cafe have said they are disappointed they will not able to serve alcohol when opening for the first time on Saturday.

Rachel Pearlman, Zoe Bradbury, Jack Northcott and Jordan Keeble of Ginger Nut Media team  at the OXO Tower in London, after being awarded as the best level of support during Advanced Apprenticeships.

A digital advertising firm is celebrating after scooping an award for its supportive training regime.

Royal Mail has seen a rise in annual profits.

Royal Mail today reported a rise in underlying annual profits as a squeeze on costs helped offset a lower than expected performance from its parcel business.

Bury Council Building Angel Hill.

The new chairman of Bury Town Council has said he intends to make the authority relevant after claiming it has done “almost nothing” for the last few years.

Tesco  Group Chief Executive Dave Lewis

Tesco paid £4.1 million to new boss Dave Lewis in his first six months after he was brought in from consumer goods group Unilever to turn around the embattled supermarket.

A branch of cash and carry chain Booker

The country’s largest cash and carry chain is to buy Londis and Budgens in a £40million deal to boost its scale amid the ongoing supermarket price war.

Most read

Most commented

Topic pages